The Hurricane Sandy Relief Foundation and its operators, Sparta residents John Sandberg and Christina Terraccino, were the subject of an Asbury Park (N.J.) Press investigation that raised questions about the group's activities.

On Thursday, the state Attorney General's Office and the New Jersey Division of Consumer Affairs filed a lawsuit against Sandberg, Terraccino and the foundation, citing numerous violations of the state's charities code. A consumer affairs spokesman said criminal charges also are possible.

"This organization told the state it does not pay its executives, but our investigators found a paper trail reflecting thousands of dollars being transferred into the individual defendants' personal bank accounts," Attorney General Jeffrey S. Chiesa said in a prepared statement. "Meanwhile, less than 1% of the money raised has allegedly been paid out to help the victims of Sandy."

The group has raised at least $631,000 in cash donations through its website, www.sandyrelief.org, according to the state's complaint. Nearly $39,000 in reported donations still are unaccounted for, the complaint states.

False claim

In addition to diverting money for their private use, Sandberg and Terraccino misled donors by falsely claiming that the foundation is a tax-exempt 501(c)(3) charity, and by co-opting the name of a legitimate charity headed by New Jersey first lady Mary Pat Christie, the Hurricane Sandy New Jersey Relief Fund, the complaint states.

The Press' investigation found that Sandberg began planning the relief group and creating its website days before the storm made landfall in New Jersey, registering more than 100 Internet domain names related to Sandy relief.

State investigators found that Sandberg also had registered domain names related to Hawaii disaster relief in 2011 after a tsunami struck that state.

Sandberg, 30, said in an email Thursday that he wasn't aware of the lawsuit.

He made no further comment.

The HSRF's Twitter profile still was advertising the group as a 501(c)(3) charity this week.

The group's website also had continued to identify Hanes and CSX Corp. among its corporate "sponsors" although both companies say they are not supporting the group. CSX directed the group to remove the company's logo from the site earlier this month.

In a January interview, Sandberg said the group had distributed about $150,000 to storm victims, not including hundreds of thousands of dollars in supplies he said the group handed out at relief centers throughout New Jersey and New York.

But the group's records identify just two aid recipients, the Moonachie (N.J.) First Aid & Rescue Squad, and Middletown, N.J., resident Michael C. Armstrong. Armstrong told the Press he received several hundred dollars in Lowe's gift cards for family members in Highlands, N.J., whose homes were damaged in the storm.

Forms filled out

Other storm victims told the Press that they had filled out the foundation's detailed online application for aid but never heard back from the group.

Sandberg said in January that distributions had slowed in part because the group needed to develop better procedures for processing and vetting aid applications.

"That's the challenge that we face and pretty much anybody who has a foundation right now, including the state, is facing. There's just a lot of fraud, people that are trying to scam," Sandberg said. "I guess it goes with any disaster."

Sandberg identified Mike Teel, a former standout quarterback at Rutgers University, as one of the founders and trustees of the Hurricane Sandy Relief Foundation.

But Teel said he was never formally involved with the group.

"I didn't really do anything. He had reached out to me to see if I would be interested," Teel said. "I said, 'Yeah, anything I could do to help.' ... I may have shared a link on the Internet to get the word out, but that is as far as it went."

Sandberg's sister, Julie Sandberg, also is listed as trustee, the state's complaint states. Sandberg incorporated the foundation Oct. 31 using his parents' home in Wyckoff, N.J., as the group's address. Donors were directed to mail checks to Terraccino's parents' home in South Hackensack, N.J.

Records also show that more than $3,000 was transferred from the foundation's PayPal account to "Jezel Yepez," an alias for Anthony Yepez, a Web developer and "volunteer" who helped work on the group's website, the complaint states.

Multiple accusations

The state's lawsuit, which the Division of Law filed in state Superior Court in Bergen County, accuses the defendants of multiple violations of New Jersey's Charitable Registration and Investigation Act, Charities Regulations, the Consumer Fraud Act and the Nonprofit Corporation Act.

The lawsuit asks the court to order the defendants to stop soliciting donations, shut down their website, repay all money and return all property acquired by violating the law, and pay thousands of dollars in penalties.